The Union Cabinet, on Thursday, hiked prices of various grades of ethanol for supply to oil marketing companies, a move that will benefit sugarcane farmers and lead to higher blending of the clean fuel with conventional petroleum products.
In a media briefing following the cabinet decision, Information and Broadcasting Minister Prakash Javadekar said that the price of sugar juice-based ethanol was being increased by Rs 3.25 per litre to Rs 62.65 per litre, that of ethanol ‘B Heavy’ was being raised to Rs 57.61 per litre, and ‘C Heavy’ ethanol will fetch Rs 45.69 per litre.
“This is an increase of about Rs 2 to Rs 3.35 per litre for various grades. The GST and transportation costs will be borne by the oil marketing companies, as is the norm,” Javadekar said.
“In 2014, only 380 million litres of ethanol could be purchased by oil marketing companies. Last year it was 1.95 trillion litres,” the minister said.
The Modi government has had a long stated aim to increase ethanol blending with conventional fuels by oil marketing companies. The aim is to ensure that around 10 per cent of the total petroleum consumed in the country is blended with ethanol by 2022 and thereafter the target could be scaled up to 20 per cent blending by 2030.
This was accompanied by differential prices for various grades of ethanol made from C-heavy and B-heavy molasses, sugar juice, direct sugar and from sources other than sugarcane, such as broken rice and maize as feedstock.
There was also an ambitious incentive of interest subvention costing about Rs 5,000 crore to the Central government.
Even then, in the 2019-20 sugarcane season that ended in September, India blended around 5.11 per cent ethanol with petrol--a far cry from the 2022 target of 10 per cent blending.
News agency PTI in a recent report said that the petroleum and food ministries are of the view that ethanol production cannot be dependent on one feedstock, that is, sugarcane, for achieving the target of 20 per cent ethanol blending with petrol by 2030. There is a need to look at other agri-feedstock such as rice, maize, sorghum and barley for the purpose.
India currently has 4.26 billion litres of ethanol production capacity annually while the actual ethanol produces is much lower at around 2 billion litres. When all the new production capacities come on-stream, India will start producing 5.5 billion litres.
However, to achieve a 20 per cent blending target by 2030, this capacity and estimated production is inadequate as India will need around 10 billion litres of ethanol per year to meet the 20 per cent blending target.